Correlation Between Bluescope Steel and Aspire Mining

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Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Aspire Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bluescope Steel and Aspire Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Aspire Mining, you can compare the effects of market volatilities on Bluescope Steel and Aspire Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bluescope Steel with a short position of Aspire Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Aspire Mining.

Diversification Opportunities for Bluescope Steel and Aspire Mining

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Bluescope and Aspire is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Aspire Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspire Mining and Bluescope Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bluescope Steel are associated (or correlated) with Aspire Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspire Mining has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Aspire Mining go up and down completely randomly.

Pair Corralation between Bluescope Steel and Aspire Mining

Assuming the 90 days trading horizon Bluescope Steel is expected to generate 6.37 times less return on investment than Aspire Mining. But when comparing it to its historical volatility, Bluescope Steel is 3.73 times less risky than Aspire Mining. It trades about 0.05 of its potential returns per unit of risk. Aspire Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.70  in Aspire Mining on September 13, 2024 and sell it today you would earn a total of  21.30  from holding Aspire Mining or generate 317.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bluescope Steel  vs.  Aspire Mining

 Performance 
       Timeline  
Bluescope Steel 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Bluescope Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Bluescope Steel may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Aspire Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aspire Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Aspire Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bluescope Steel and Aspire Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bluescope Steel and Aspire Mining

The main advantage of trading using opposite Bluescope Steel and Aspire Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Aspire Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aspire Mining will offset losses from the drop in Aspire Mining's long position.
The idea behind Bluescope Steel and Aspire Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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